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[TOKYO] A third-party probe set up by Japan's Toshiba Corp to investigate its accounting practices has been given a failing grade by half of a group of influential lawyers, who said it was not sufficiently independent and did not examine a key division.
The lawyers' report, and a call by leader of the group for the investigation to be redone, has added to a storm of criticism about Toshiba's corporate governance efforts as it seeks to put the US$1.3 billion accounting scandal behind it.
The third-party probe found in July that the laptops-to-nuclear power conglomerate had padded profits going back about seven years, blaming aggressive earnings goals and a corporate culture that discourages employees from questioning their superiors. "The probe is the worst I've ever seen," attorney Hideaki Kubori, who leads the group, told Reuters in an interview."Toshiba has the choice of redoing the third-party probe or continuing to window dress. The company appears to be opting for the latter." On a scale of "A" to "F", the probe was given three "F"s and one "D", while managing four "C"s from the eight member committee that compiled the report. The group often reports on third-party panels in an effort to increase the credibility of such panels.
Asked about the report and Kubori's call for the probe to redone, Toshiba said in a statement that it took the results seriously and will do its best to regain the trust of stakeholders, but declined to comment further.
The probe was particularly criticised for only looking into accounting issues in fields designated by Toshiba and excluding others such as its US nuclear unit Westinghouse.
Doubts over the probe intensified this month, when Toshiba confirmed a magazine report that Westinghouse had written down assets by US$1.3 billion in the 2012 and 2013 financial years - charges that had not been previously disclosed.
Toshiba's market value has declined some 40 per cent in the wake of the scandal, and it has embarked on a lawsuit against former executives. But that has also been criticised by corporate governance experts for being a half-hearted effort that only seeks to mitigate lawsuits from shareholders.